Arch Dornan
Oh, lovely. They've sent me a mo-ron.
I don't know anything about investment it's why I'm asking.
So for noobs it's better to try an index fund?
Anyone else here dabble in the stock market or invest?
- Thread starter Es Arcanum
- Start date
So for noobs it's better to try an index fund?
I'd say yes. On the other hand, I'm not a professional investment advisor, so IDK that you should take advice from this board other than don't daytrade, because you might not be able to filter out bad advice from good advice if you don't know much.
Arch Dornan
Oh, lovely. They've sent me a mo-ron.
I won't be able to daytrade. I would at least need to know daytrade math to calculate in my head and I'm already bad enough having to think calculations slowly.
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Even if you think you can, you can't. If you aren't using a massive computer that costs tens of thousands, you probably can't daytrade and make a long term profit. That's the kinda equipment needed for daytrade math.
Arch Dornan
Oh, lovely. They've sent me a mo-ron.
So only Skynet could have a chance.
AnimalNoodles
Well-known member
Arch Dornan
Oh, lovely. They've sent me a mo-ron.
Is that by googling and seeking the advice of an investment firm?
Bear Ribs
Well-known member
Investment firms generally work by taking your money, and making it their money.
Active fund managers trail the S&P 500 for the ninth year in a row in triumph for indexing
Investing in low-cost, passive funds remains the soundest long-term investment.
www.cnbc.com
It's been the case for decades now. A supermajority of investment firms literally underperform the average of the stock market every year by a hefty margin. Most don't earn their money by making you money, they earn by charging you the user various fees such as per stock trade leading them to have a perverse incentive where the best thing for you is leaving your money in a stock that's performing well, but the best thing for them is to pull that money and put it in a less-productive stock so they can charge you a fee. They also tend to want to do more trades more often in order to look like they're "doing something," which is the opposite of what smart trading is.
You can literally beat most professionally managed funds by using a dartboard and investing in whatever stock the dart hits. If you want long-term, just use an index fund, which invests in ever stock simultaneously and thus goes up whenever the market goes up, and does not do any trading beyond buying when somebody adds money, which means there's minimal overhead expenses.
AnimalNoodles
Well-known member
You need to talk to someone who knows the in and outs and can help you with the details, but seriously, do a basic index fund and hold. understand though, that markets arent the best way to save for your retirement.
Arch Dornan
Oh, lovely. They've sent me a mo-ron.
I know it's not the end all. I'm just considering alternate options for income.
I'll look up my YouTube subscriptions, there are a few guys who are really good at explaining the basics of investing in the stock market.
Edit: I've got two Aussies on my subscription list (the rest would be German channels, so... useless to you, I assume), but they are really good for the basics - and the basics don't substantially change between countries anyways.
The first is Hamish Hodder. The other one is New Money. They overlap a bit since they actually cooperate on podcasts etc. These should provide you with some basic information with regards to stock market investments. If you're uncertain even after that, I support the recommendations that others here have given you for a broad index fund. Whatever you do, remember this: on average, you will gain money with a buy-and-hold stragety over longer periods of time. Anything between 7-12% on average is possible. But if the market as a whole crashes, so will your portfolio. Hence: always diversify.
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I really don't think it is as complex as some make out 😄
As in many things the risk you take is usually matched by the potential gains you can make. At the moment the 'gains' you make by putting your savings in a savings account is actually negative. As in the interest rate won't even keep pace with inflation, so having 'savings' is basically just controlling the slow bleeding of your capital but at least you know that as sure as possible it is as safe as houses.
Everyone should have enough savings/cash in hand to meet sudden setbacks or emergencies.
But when it comes to having your savings actually DO something to grow then once again atm there are several methods to get a better return than a savings account. If you're obsessed with safety so don't want any risk whatsoever than government or some corporate bonds are one way to do so (though I don't think US government bonds atm offer enough to offset inflation). Stocks or bonds in a company that is unlikely to collapse or that is 'too big to fail' (i.e. will probably be bailed out by the government) offers a fairly decent chance I'd say of better returns on your investment. You might see temporary setbacks or declines but in the long run, provided the whole system doesn't collapse for some reason (in which case you'll likely have bigger issues) then I think the current environment favours investors over savers. And as in many things if you're going to invest any significant amounts then spread it around and don't put all your eggs in one basket.
As in many things the risk you take is usually matched by the potential gains you can make. At the moment the 'gains' you make by putting your savings in a savings account is actually negative. As in the interest rate won't even keep pace with inflation, so having 'savings' is basically just controlling the slow bleeding of your capital but at least you know that as sure as possible it is as safe as houses.
Everyone should have enough savings/cash in hand to meet sudden setbacks or emergencies.
But when it comes to having your savings actually DO something to grow then once again atm there are several methods to get a better return than a savings account. If you're obsessed with safety so don't want any risk whatsoever than government or some corporate bonds are one way to do so (though I don't think US government bonds atm offer enough to offset inflation). Stocks or bonds in a company that is unlikely to collapse or that is 'too big to fail' (i.e. will probably be bailed out by the government) offers a fairly decent chance I'd say of better returns on your investment. You might see temporary setbacks or declines but in the long run, provided the whole system doesn't collapse for some reason (in which case you'll likely have bigger issues) then I think the current environment favours investors over savers. And as in many things if you're going to invest any significant amounts then spread it around and don't put all your eggs in one basket.
Something like the investment rule of thumb usually goes like this: keep the equivalent of three to five net incomes in cash setting in a call money or savings account to be able to react to sudden problems or expenses. That is, of course, in a low inflation environment.
Everything above that level basically comes down to how ready to take risks you are. And as Es already stated, the risk increases with the margins. So, on the lower end you'll have treasury bonds (which barely break even nowadays in a zero or negative interest market for AAA rated ones), and on the high end you have options and knock-out certificates and day-trading in currencies and the like.
As a private investor, especially if you're not looking to do much active trading, go for a "World" index fund. If you want to add an extra layer of security, go for 70/30 split of a World ETF and something covering bonds (also in ETF form).
If you want to go a more specialized route with picking individual stocks the first question I`d ask if you are a growth or dividend investor, because then you'll have to chose your stock accordingly. Picking dividend stocks on the face of it is simpler, as you can just look at which companies have been continuously paying them (there's even lists of dividend "aristocrats" and "kings", ie. stocks that have been paying and raising their dividends for 25/50 consecutive years). Doing that means you're in for a slow burn which largely guaranteed quarterly, monthly or annual payouts but also little or slow stock price growth.
Then there are growth stocks, where you have the chance to double, tripple or gain tenfold increases on your initial investment. Amazon or Netflix are examples of those where you'd have made 1000% gains if you had made an investment shortly after their IPOs and held the stocks until today. The problem here is: it`s largely guessing trends and business models. Though that's unarguably where the big money is.
Though if you have a couple thousand bucks sitting on an account that you don`t really need you can still try and gamble on some penny stocks. *shrugs*
The next and definately more risky part is generally P2P-investing. It's basically investing done by bypassing actual banks. The big platforms here are Mintos, Bondora, and a slew of others for consumer financing, EstateGuru and BulkEstate for real estate investing, and more specialized platforms like Crowdestor for business ideas etc. Most of those come with some safety features included (though I'd rate the real estate platforms the most secure as they have their loans backed by first-rate demands on the properties themselves), but realize that complete losses are absolutely possible. In return, annual returns between 10 - 25/30% are possible. But be aware that this is something only to do with money that you can afford to lose! Don't stick your life`s savings there. And make sure you categorize between them with regards to risks. Something backed by access to property like real estate, i.e. EstateGuru, is a good deal more crisis resistant than a platform like Mintos whose lenders mostly deal in consumer loans.
Having said that, if anyone is still interested in these platforms you can PM me and I'll send you referal links...
Everything above that level basically comes down to how ready to take risks you are. And as Es already stated, the risk increases with the margins. So, on the lower end you'll have treasury bonds (which barely break even nowadays in a zero or negative interest market for AAA rated ones), and on the high end you have options and knock-out certificates and day-trading in currencies and the like.
As a private investor, especially if you're not looking to do much active trading, go for a "World" index fund. If you want to add an extra layer of security, go for 70/30 split of a World ETF and something covering bonds (also in ETF form).
If you want to go a more specialized route with picking individual stocks the first question I`d ask if you are a growth or dividend investor, because then you'll have to chose your stock accordingly. Picking dividend stocks on the face of it is simpler, as you can just look at which companies have been continuously paying them (there's even lists of dividend "aristocrats" and "kings", ie. stocks that have been paying and raising their dividends for 25/50 consecutive years). Doing that means you're in for a slow burn which largely guaranteed quarterly, monthly or annual payouts but also little or slow stock price growth.
Then there are growth stocks, where you have the chance to double, tripple or gain tenfold increases on your initial investment. Amazon or Netflix are examples of those where you'd have made 1000% gains if you had made an investment shortly after their IPOs and held the stocks until today. The problem here is: it`s largely guessing trends and business models. Though that's unarguably where the big money is.
Though if you have a couple thousand bucks sitting on an account that you don`t really need you can still try and gamble on some penny stocks. *shrugs*
The next and definately more risky part is generally P2P-investing. It's basically investing done by bypassing actual banks. The big platforms here are Mintos, Bondora, and a slew of others for consumer financing, EstateGuru and BulkEstate for real estate investing, and more specialized platforms like Crowdestor for business ideas etc. Most of those come with some safety features included (though I'd rate the real estate platforms the most secure as they have their loans backed by first-rate demands on the properties themselves), but realize that complete losses are absolutely possible. In return, annual returns between 10 - 25/30% are possible. But be aware that this is something only to do with money that you can afford to lose! Don't stick your life`s savings there. And make sure you categorize between them with regards to risks. Something backed by access to property like real estate, i.e. EstateGuru, is a good deal more crisis resistant than a platform like Mintos whose lenders mostly deal in consumer loans.
Having said that, if anyone is still interested in these platforms you can PM me and I'll send you referal links...